SGX launches SGX Sustainability Indices

Originally published on 31 May 2016

Singapore Exchange (SGX) has announced the launch of SGX Sustainability Indices, a suite of equity indices composed of SGX-listed stocks introduced by SGX Index Edge. SGX’s partner, Sustainalytics, provided the environmental, social and governance (ESG) research and ratings for SGX-listed companies, and the ratings underpin the Indices.

The indices suite is made up of four new indices including the flagship SGX Sustainability Leaders Index, which is comprised of SGX-listed companies that are considered to be clear frontrunners in ESG standards when compared to their peers. In addition to meeting the necessary ESG requirements, companies must also meet minimum liquidity requirement in order to qualify for inclusion.

Loh Boon Chye, CEO of SGX, said, “Investors across the globe are placing increasing importance on ESG, resulting in significant growth of AUM allocated to ESG strategies and growing demand for transparent benchmarking tools. SGX Sustainability Indices provide a transparent avenue through which investors can assess the sustainability practices of SGX-listed companies and identify ESG leaders in Singapore. They will also help to further profile SGX-listed companies with strong relevant credentials among a growing pool of ESG-aware international investors.”

Michael Jantzi, CEO of Sustainalytics, said, “SGX is playing a leading role in advancing sustainability issues globally. We hope as a result of their new family of Indices, increasing numbers of SGX-listed companies will enhance their disclosure around ESG issues, enabling investors to make more informed decisions. We are delighted to partner with SGX and applaud them for expanding the range of sustainable investment options.”

The introduction of the index suite complements SGX’s efforts to enhance disclosure and access to sustainability information, including the introduction of sustainability reporting for listed companies on a “comply or explain” basis.

Commenting on the launch of indices, David Smith, Head of Corporate Governance at Aberdeen Asset Management said, “Aberdeen fully supports the integration of ESG into the investment process. As long-term investors we firmly believe in the need to consider and fully understand all risks, rather than narrowly defined financial risks, that relate to a company’s long term success. We look forward to companies rising to the challenge of providing transparency around the key material risks to the sustainability of their business models. Aberdeen wholeheartedly supports SGX’s leadership and developments in ESG.”